FanDuel Sportsbook appears to lead in the race to profitability among U.S. mobile sportsbooks. The company reported its quarterly results last week, and it profited $22 million in Q2.
While that might sound unremarkable on its face, profitability has escaped all of the major U.S. online betting operators thus far. A Yahoo report called it a “seismic shift” in the industry. The positive quarter is believed to be the first of its kind in the post-PASPA repeal for online operators.
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FanDuel Sportsbook Credits Partnerships, Strong NBA Season
It’s worth noting that the timing of the New York launch and the arbitrary endpoints of the quarters plays into this profitability. That is, the company likely spent a ton on marketing during Q1 — NY mobile sports betting launched Jan. 8 — and then reaped some benefits in Q2.
But, the moment still registers as important simply due to the long course every U.S. sportsbook has charted over recent years. Remember, the Supreme Court struck down PASPA in early 2018. But between regulatory costs, lobbying and marketing spend, U.S. sports betting served as an immediate money sink for the ensuing years. Some wondered about the industry’s sustainability.
Finally, one operator has borne fruit.
FanDuel CEO Amy Howe spoke on the profitable quarter to Yahoo.
“We’ve always been very efficient at how we bring customers onto the platform,” Howe said. “We’ve always had a strong brand, one we’ve engaged with phenomenal talent like Pat McAfee. We have innovations with TNT and Turner. The NBA was a big part of Q2 this year. The acquisition engine is getting stronger for us everyday.”
The company also reported strong conversion rates from its daily fantasy sports (DFS) platform. It reported converting more than 60% of DFS players into sports bettors in several states, New York among them.
FanDuel Not Expecting Profitability To Stick Despite Strong Metrics
Beyond simply turning a profit, FanDuel Sportsbook also reported strong results in a couple of other metrics. Howe said FanDuel leads its competitors in 13 of the 15 markets in which it operates. Additionally, the company’s quarterly presentation claimed a 51% share of sportsbook gross gaming revenue in those states. That more than doubles its nearest competitor.
Despite these stellar numbers, parent company Flutter still targets 2023 to be FanDuel’s first fully profitable year.
Upcoming launches in Ohio and Kansas will surely see marketing spending increase once again. And there remains some chance of a regulatory breakthrough in California. Should that occur, the marketing expense would be potentially rivaled by only that in New York.